GUIDE TO PRIVATE MERGERS & ACQUISITIONS IN ASIA

© Rajah & Tann Singapore LLP 1

GUIDE TO PRIVATE MERGERS & ACQUISITIONS IN ASIA

Private & Confidential


Contents

Foreword 3

Asia Market Entry – A Comparative Analysis 5

Cambodia 211

China 23

Indonesia 266

Lao PDR 299

Malaysia 377

Myanmar 40

Philippines 43

Singapore 46

Thailand 48

Vietnam 51

Asia Market Entry – Merger Control Issues 55

Key Contacts 61

Regional Contacts 655

About Us


Foreword

This guide gives a brief comparative

overview of certain key regulatory

requirements relating to mergers and

acquisitions of private companies in

Cambodia, Indonesia, Lao PDR, Malaysia,

Myanmar, Philippines, Singapore, Thailand

and Vietnam. Also included is a section on

the merger control provisions that apply

across these jurisdictions.

Our Mergers & Acquisitions (“M&A”) Practice Group

services a diverse array of clients. No client is too big

or too small. We act for multinationals, financial

institutions, accounting firms, investment banks,

listed and unlisted groups including government-

linked groups, funds, private equity investors, high

net-worth individuals, SMEs, principals and their

advisers.

Across all our offices, we work together as one

highly rated team with in-depth and extensive

experience having dealt with the most significant

cross-border M&A transactions, both public and

private, including high-profile, complex and

challenging deals in Asia and beyond. Our M&A

partners are valued by clients for their wealth of

industry insights and their ability to present sound,

innovative and commercial solutions in challenging

M&A transactions. Many of our M&A partners in the

region are recognised as leading practitioners in this

field by various international publications and they

have garnered numerous accolades in the public

and private M&A space.

A key pillar to our strength in cross-border

transactions is our Rajah & Tann Asia network with

offices in Cambodia, China, Indonesia, Lao PDR,

Malaysia, Myanmar, Philippines, Singapore,

Thailand and Vietnam, as well as dedicated desks

focusing on Japan and South Asia. With the most

extended legal network in Asia, our lawyers have a

tight grasp of the local culture, business practices

and language not just within their own home

countries, but in the other markets that they

frequently conduct cross-border deals as well. Our

depth of transactional and regulatory experience

allows us to advise clients strategically and

creatively, from structuring to eventual execution

and implementation of the transaction.

This gives us an unparalleled edge over our

competitors in presenting and pursuing solutions

that are both practical and cost-effective. It provides

our clients with the “home advantage” in any

competitive M&A bids or tenders.

Our team draws on the expertise of our other

practice groups to provide specialist advice on the

different facets of the transaction, such as cross-

border issues, regulatory compliance, competition

and antitrust issues, tax structuring as well as

industry-specific issues.

Our regional network enables our offices to work

together closely to provide seamless “one-stop

shop” service to our clients to meet their needs in

cross-border M&A transactions, from advising on

anti-trust and other market access restrictions,

obtaining local regulatory approvals to conducting

legal due diligence across the region and providing

a seamless legal due diligence report.

The contents of this guide are owned by Rajah &

Tann Singapore LLP and subject to copyright

protection under the laws of Singapore and, through

international treaties, other countries. No part of this

guide may be reproduced, licensed, sold, published,

transmitted, modified, adapted, publicly displayed,

or broadcast (including storage in any medium by

About Us


electronic means whether or not transiently for any

purpose save as permitted herein) without the prior

written permission of Rajah & Tann Singapore LLP.

Please note also that whilst the information in this

guide is correct to the best of our knowledge and

belief at the time of writing, it is only intended to

provide a general guide to the subject matter and

should not be treated as a substitute for specific

professional advice for any particular course of

action as such information may not suit your specific

business and operational requirements. It is to your

advantage to seek legal advice for your specific

situation. In this regard, you may call the lawyer you

normally deal with in Rajah & Tann Singapore LLP

or e-mail the Knowledge & Risk Management Group

at [email protected].

A Comparative Analysis


Asia Market Entry – A Comparative Analysis

CAMBODIA CHINA INDONESIA LAO PDR MALAYSIA MYANMAR PHILIPPINES SINGAPORE THAILAND VIETNAM

Governing

Legislation

Law on Commercial Enterprise

Law on Commercial Registration Rules and Commercial Register 1995 (as amended in 1999)

Law on Investment (as amended in 2003)

Civil Code

PRC Company Law

PRC Contract Law

Three PRC Regulations in relation to Foreign Investment (Laws of the People's Republic of China on Sino-Foreign Equity Joint Ventures, on Wholly Foreign-owned Enterprises and on Sino-Foreign Contractual Cooperative Enterprises) which is to

Law No. 40 of 2007 on Limited Liability Companies

Law No. 25 of 2007 on Investment

Government Regulation No. 24 of 2018 on Electronic Integrated Business License Services (“GR No. 24/2018”)

Presidential Regulation No. 44/2016 on List of Business Fields Closed to Investment and Business Fields Open

Law No. 46/NA on Enterprises

Law No. 14/NA on Investment Promotion

Law No.70/NA on Tax

Companies Act 2016

Promotion of Investments Act 1986

Limited Liability Partnerships Act 2012

Registration of Businesses Act 1956

Industrial Co-ordination Act 1975

Myanmar Companies Law 2017

Special Company Act 1950

State-Owned Economic Enterprises Law 1989

Myanmar Investment Law 2016

Special Economic Zone 2014

Revised Corporation Code of the Philippines

Securities Regulation Code

Foreign Investments Act of 1991

Omnibus Investments Code of 1987

Special Economic Zone Act of 1995

Companies Act (Cap. 50)

Business Names Registration Act 2014 (Act 29 of 2014)

Limited Liability Partnerships Act (Cap. 163A)

Limited Partnerships Act (Cap. 163B)

Partnership Act (Cap. 391)

Civil and Commercial Code

Public Limited Companies Act B.E. 2535

Foreign Business Act

B.E. 2542

Investment Promotion Act B.E. 2520

Securities and Exchange Act B.E. 2535

Law on

Enterprises

No.

68/2014/QH

13 and

related

implementin

g

regulations

Law on Investment No. 67/2014/QH13 and related implementing regulations

Law on Securities No. 70/2006/QH11, its amendments and related implementing regulations




be abolished on 1 January 2020.

PRC Foreign Investment Law (which takes effect from 1 January 2020)

Provisions on the Merger and Acquisitions of Domestic Enterprises by Foreign Investor

with Conditions to Invesment (“Negative Investment List”)

Investment Coordinating Board (“BKPM”)1 Regulation No. 13 of 2017 on Guidelines and Procedures for Investment Licensing and Facilities

Minister of Trade Regulation No. 10/M-DAG/PER/3/2006 on Trade Representative Offices of Foreign Companies (as amended in 2010)

1 On 21 June 2018, the Government of the Republic of Indonesia issued GR No. 24/2018. One of the mandates is to establish the Online Single Submission (OSS) portal, an online platform that integrates the multiple regulatory permissions in one place to facilitate easy approvals. As a result of the issuance of GR No. 24/2018, BKPM announced through a press release that it has suspended all processing and issuance of permits and licenses as of

29 June 2018. In respect of any applications that have been submitted prior to 29 June 2018, GR No. 24/2018 provides that such applications will be processed by the OSS portal which will be ope rated and managed by the so-called OSS Body.




Presidential Decree No. 90 Year 2000 on Representative Offices of Foreign Companies




Regulating

Body

Ministry of Commerce

General Department of Taxation

Council for the Development of Cambodia

National Bank of Cambodia

Ministry of Economy and Finance

Securities and Exchange Commission of Cambodia

Ministry of Commerce (MOFCOM)

State Administration for Market Regulation (SAMR)

State Administration of Foreign Exchange (SAFE)

State-owned Assets Supervision and Administration Commission (SASAC)

Other industry regulatory authorities

Ministry of Law and Human Rights

Ministry of Trade

BKPM

Online Single Submission Management and Organising Body (Lembaga Pengelola dan Penyelenggara Online Single Submission / “OSS Body”)2

Ministry of Industry and Commerce

Ministry of Planning and Investment

Ministry of Finance

Secretariat to the Lao National Committee on Special Economic Zones

Companies Commission of Malaysia

Malaysian Investment Development Authority

Economic Planning Unit

Malaysian Ministry of International Trade and Industry

Company Registration Office

Directorate of Investment and Company Administration

Myanmar Investment Commission

Special Economic Zone Management Committees

Securities and Exchange Commission

Department of Trade and Industry (Board of Investments)

Philippine Economic Zone Authority

Accounting and Corporate Regulatory Authority

Economic Development Board

Ministry of Commerce

Board of Investment

Foreign Business Committee

Securities and Exchange Commission

Department of Planning and Investment

Management Board of Industrial Zones

Other authorities would be involved in the appraisal process

Minimum

Share

Capital

Requirement

s for

Companies

Minimum share capital of KHR 4 million

Except for certain industries, no minimum share capital requirement but the registered capital shall

Minimum issued and paid-up capital of IDR 2.5 billion An investment plan to be submitted to

Generally, no minimum registered capital requirement. Certain businesses as described

Generally, no minimum share capital requirement but at least one subscriber is required for incorporation.

No minimum share capital, but at least one share must be issued, exlcuding cmpanies/investments

No minimum share capital, but at least one share must be issued A corporation with foreign

No minimum share capital, but at least one share must be issued

At least three shareholders holding one share each, with minimum par value of THB 5

No minimum capital contributions except for certain sectors At least three shareholders

2 Based on the definition provided in GR No. 24/2018, the BKPM will likely be the OSS Body. Nevertheless, in the interim, the OSS portal will be spearheaded by the Coordinating Ministry for Economic Affairs (CMEA) until such time BKPM is deemed ready to take over.




be compatible with the business scale of the company.

BKPM for a quantum exceeding IDR 10 billion3

under Announcement No. 1327/MOIC dated 13 July 2015 on List of Conditional Business for Foreign Investment issued by the Ministry of Industry and Commerce require minimum Lao shareholding and/or minimum registered capital.

Minimum share capital requirements may apply to certain regulated sectors or industries.

established under Sepcial Economic Zone Law 2014 where the minimum paid up capital varies from US$300,000 to US$10,000,000.

equity in excess of 40% and is considered a domestic market enterprise4 must have a minimum paid-up capital of US$100,000 or US$200,000 depending on certain conditions; except that an export enterprise, even with more than 40% foreign equity, is not subject to a minimum paid-up capital.5)

Any registration of initial capital exceeding THB 5 million, or increase of registered capital to an amount exceeding THB 5 million, will require additional compliance Minimum capital requirement for a foreigner operating business in Thailand of THB 2 million

for joint stock companies

3 Please note that requirements for foreign direct investment in relation to (i) minimum issued and paid-up capital and (ii) investment plan, currently being regulated under the BKPM Regulation No. 13/2017. Since the issuance of GR No. 24/2018, the foreign investment licenses has been suspended and further will be issued through the OSS portal. In light of the foregoing, the current minimum issued and paid-up capital will remain subject to OSS

regulations or guidelines (if any). 4 A “domestic market enterprise” means “an enterprise which produces goods for sale, renders service, or otherwise engages in any business in the Philippines.” See Implementing Rules and Regulations of the Foreign

Investment Act of 1991, as amended, §1(k). 5 An “export enterprise” means “an enterprise wherein a manufacturer, processor or service (including tourism) enterprise exports sixty percent (60%) or more of its output, or wherein a trader purchases products domestically and exports sixty percent (60%) or more of such purchases.” See id. §1(g).




Foreign

Ownership

Restriction

for

Companies

Generally, no foreign ownership restrictions save for certain prescribed sectors such as cigarette manufacturing, movie production, gemstone mining and traditional media industries

Foreign ownership restrictions in various sectors are governed by (a) the respective “Special Administrative Measures (Negative List) for the Access of Foreign Investment” applied inside the free-trade zones of China and the one applied outside the free-trade zones of China, which lists will be updated from time to time; and (b) other PRC laws and regulations.

Foreign ownership restrictions in various sectors are governed by the Negative Investment List

Unless a particular business sector is specifically subject to foreign ownership restrictions under the Negative Investment List, a business sector should not be subject to any foreign ownership restrictions. However, BKPM may nevertheless impose foreign ownership restrictions

Generally, no foreign ownership restrictions save for certain prescribed industries which are deemed by the Lao government to be detrimental to national security, health or traditions, or have a negative impact on the natural environment

Generally, no foreign ownership restrictions save for certain regulated industries such as financial services, broadcasting, electricity, oil and gas, insurance and maritime and logistics industries

Certain prescribed industries are reserved for the government under the State-Owned Economic Enterprises Law and no foreign ownership is allowed, but exceptions are available for joint ventures with the government in these industries and sectors

Under the Foreign Investment Law, there are 3 further categories of restricted activities:

1. wholly prohibited activities;

Generally, no foreign ownership restrictions save for certain prescribed industries where foreign ownership is prohibited such as mass media, private security and other prescribed industries which have foreign ownership caps of 0% to 60% such as recruitment, advertising, education, and financing companies

Generally, no foreign ownership or investment restrictions in most industries save for certain prescribed sectors generally perceived to be critical to national interests, i.e. banking, finance, insurance, domestic news media and broadcasting

Generally, no foreign ownership restrictions save for three prescribed categories of restricted activities under the Foreign Business Act B.E. 2542:

1. wholly prohibited activities (no foreign ownership allowed);

2. activities permitted with license from the Ministry of Commerce and are at least 40% Thai-owned (may be reduced to 25%) and two-fifths of directors must be Thai

100% foreign ownership generally permitted, except for certain prescribed industries such as banking, telecommunication, civil aviation, publishing and news media industries




at its discretion. 6

2. restricted activities permitted only with joint venture with Myanmar nationals; and

3. restricted activities permitted where specific conditions are satisfied

Generally, save for the above, there are no foreign ownership restrictions. However, foreign ownership restrictions may be administered as a matter of policy; for example, trading activities cannot be

nationals; and

3. activities permitted with license from the Ministry of Commerce (Director General) and approval from the Foreign Business Committee

6 This will remain subject to any OSS regulations or guidelines (if any).




undertaken by foreign companies in Myanmar

Time

Required to

Set-up a

Company

14 to 30 days (including tax registraton but excluding any specific licenses or QIP status approval)

Around 3 – 12 weeks (assuming no industry-specific or pre-approval is required)

2 to 3 work days (assuming all documentation are in order)

45 days to 120 days

2 to 3 working days (assuming all documentation are in order)

14 to 21 days from the date of complete filing

10-20 working days from submission of complete documents7

1 to 3 days (assuming all documentation are in order and no regulatory approvals are required)

28 days 10-20 working days to incorporate a domestic company, or 30 to 45 working days to incorporate a foreign-invested company from the submission of the full and valid dossiers (assuming that the project is simple and does not

7 See 2018 Citizen’s Charter of the Securities and Exchange Commission. The period excludes processing time for the application for a secondary license that may be required in regulated sectors, and post-incorporation

requirements such as registration with tax authorities.




require special approvals)

Director

Requirement

s for

Companies

At least one director

No requirement as to nationality or residency

Director must be at least 18 years old

Corporate director is not allowed

Usually there are 3-13 directors in a private limited company

If the company is small, there shall be at least one executive director

No requirement as to nationality but for Sino-Foreign Equity Joint Ventures and Sino-Foreign Contractual Cooperative Enterprises, the president and vice president of the board of directors shall be each appointed by the PRC party and

At least one director and one commissioner

No requirement as to nationality but must be natural persons. However, position as the director who is responsible for human resources matter must be held by an Indonesian director

At least one director must hold a tax identity number

A higher number may be required for companies in certain sectors

At least one director; but where value of company assets is greater than LAK 50 billion, at least two directors and board of directors are required.

Certain industries for example banking and insurance, may have different requirements.

At least one director for a private company and at least two directors for a public company, who ordinarily resides in Malaysia by having a principal place of residence in Malaysia

Director must be a natural person who is at least 18 years old

At least three directors for public companies and one of them must be a Myanmar citizen who is ordinarily resident in Myanmar

One resident director, save for public companies

At least 1 but not more than 15, with no residency requirement

If a company is subject to foreign ownership restrictions, the citizenship of the members of the board of directors is also be subject to the same foreign ownership restrictions.

Independent directors constituting 20% of the board are required of companies vested with public interest such as listed companies, banks,

At least one director who is ordinarily resident in Singapore

At least one director for a private limited company with no requirement as to nationality or residency

There are more stringent requirements for a public limited company

The director is a mandatory management position in the company who manages the daily operations of the company. Technically, each company must have at least one director. Director may also concurrently keep the legal representative position in the company if so appointed, subject to the appointment and arrangement of the company as specified in




the foreign investor (such rules will be abolished in 2020)

Certain people shall not be the director of a company as set out in the PRC Company Law (such as committed certain crimes in relation to corruption, bribery or other kinds of economic crimes, former director or manager or a liquidated or bankrupt company who was personally liable for such bankruptcy, etc.)

insurance companies and other financial intermediaries.

the company’s charter. Directors normally report to the highest management body in the company.

A company may have more than one legal representative. If it has only one legal representative, the legal representative must reside in Vietnam and must authorize other persons in writing when leaving Vietnam for more than 30 days. Legal representative is entitled to represent




the company, exercise the rights/obligations from transactions of the company. The legal representative normally reports to the highest management body in the company.

The highest management body in the company may refer to the body constituting the persons that directly hold capital or represent capital of the owner in the company. The position of the highest management body in the organizatio




nal structure is subject to the specific type of enterprise. For example, for limited liability company, the highest management body is called the Members’ Council or President. For joint stock company, the highest management body is the General Meeting of Shareholders (GMS), which decides the most important decisions of the company (such as issuance of shares, amendment of charter, etc.). The




GMS will appoint the Board of Directors (or so-called Board of Management) as the management body of the company consisting of 3-11 members to decide all matters which are not subject to GMS’ resolutions.

"Anti-Trust"/

Competition

Law Issues

- - The KPPU has the power to review or control any M&A or consolidation, including foreign-to-foreign M&A, that may affect competitive conditions in the Indonesian (domestic) market.

- Malaysian competition law does not have an economy-wide merger control regime. However, there are merger controls within the telecommunications and aviation sectors.

- - The M&A should be notified to the CCCS if it is expected to result in a substantial lessening of competition in Singapore (“SLC”). Whilst notification to the CCCS is voluntary,

- The enterprises engaging in M&A shall file an economic concentration notification dossier to the National Competition Commission before initiating economic concentration if the




Every M&A which meets a certain specified threshold and criteria shall be notified to KPPU within 30 working days after it becomes legally effective (mandatory post-notification, known as Notification).

Aside from mandatory post-notification regime, Government Regulation No. 57 of 2010 adopts a voluntary pre-notification regime which allows parties to voluntarily

Anti-trust clearances from the Malaysian Communications and the Multimedia Commission or the Malaysian Aviation Commission may be necessary if the M&A transaction triggers merger control filings.

the CCCS has a merger monitoring unit which studies transactions which may not have been notified and may, as appropriate, investigate transactions which it is of the view has resulted or would result in a SLC.

Further, the CCCS may impose financial penalties on the parties and/or direct divestiture if it concludes that a SLC has or is likely to occur. Separately, when notifying an M&A, parties

M&A reach the notification threshold.

Notification thresholds shall be determined by the Government from time to time based on several aspects, such as the total assets or total turnover in Vietnam market of the companies involved in the merger, the combined market shares of those companies in the relevant market or the value of the M&A transaction.




notify the M&A to the KPPU before the M&A is completed (voluntary pre-notification, known as “Consultation”). It is important to note that even when the M&A has been notified under the Consultation, if the M&A falls under the Indonesian merger control regime, it still has to be notified to the KPPU within 30 working days after the completion of the transaction, so as to meet the

should highlight in the notification, any agreements, arrangements or provisions which are “directly related and necessary to the implementation of the merger” (e.g. non-compete clauses of a limited duration). Such ancillary restrictions will be reviewed by the CCCS together with the M&A and will be covered by the non-opposition decision issued by the CCCS.




statutory obligation.

Cambodia


Cambodia

How are Private M&A deals commonly done in

Cambodia?

In Cambodia, Private M&A deals are commonly

done by way of (a) share acquisition, which can be

in form of a transfer of existing shares or issuance

and subscription for new shares; and (b) business

and assets acquisition.

What are the regulatory approvals required in a

Private M&A deal?

Approvals from the authorities

Depending on the industry and the sector of the

target company as well as the type of the company,

approvals may be required from the industry/sector

regulators such as the National Bank of Cambodia,

the Ministry of Economy and Finance, the Securities

and Exchange Commission of Cambodia, Ministry of

Mines and Energies etc. If the target company is also

an investment company with the qualified

investment project status, approval is also required

from the Council for the Development of Cambodia

in addition to the Ministry of Commerce (“MOC”) and

the General Department of Taxation (“GDT”).

Approvals from the internal managerial body of the

parties

Resolutions of shareholders and board of directors

adopted in accordance with the articles of the

company in compliance with the law on commercial

enterprise are usually required. Notwithstanding any

requirement otherwise stated in the articles of the

company or in the relevant laws, it is a practice that

the Council for the Development of Cambodia and

the Ministry of Commerce require a unanimous

consent of all the shareholders for any changes of

the articles of the company including the share

transfer or issuance and subscription of new shares.

What are the rights and liabilities that are

automatically transferred in a Private M&A deal?

Share acquisition

All rights and liabilities attached to the shares are

effectively transferred to the new owners, which

include rights to receive dividends, rights to attend

and vote in the shareholders meeting, rights to

nominate any board members etc, and liability for

the losses incurred by the target company (limited to

the amount already contributed as per the

shareholding). The rights and liabilities of the target

company do not change.

Business and assets acquisition

Registration of the transfer of such business and

assets will be registered or agreement to transfer

such business and assets will be entered into as

maybe applicable and relevant. As such, the rights

and liabilities pertaining to such assets will ordinarily

be passed on to the purchaser.

What transfer taxes are payable on a share sale

and an asset sale?

Share and asset transfers are subject to varying

rates of stamp duties:

1. For share transfer, stamp duty is payable at the

rate of 0.1% of the value of the transferred

shares.

2. For asset transfer

a. Movables:

In relation to transfer taxes on an asset sale,

most movable properties are not subject to

transfer tax, save for vehicles. Transfer of

Cambodia


vehicles is subject to stamp duty at the rate

of 4% of the value of the property.

b. Immovables:

Transfer of immovable properties is subject

to stamp duty at the rate of 4% of the value

of the transaction or the market value of the

property, whichever is higher.

What consultation or approval rights do

employees have in a Private M&A Deal? Do

employee contracts move automatically in a

Private M&A Deal?

The Labour Law is silent on the right to consultation

or consent of the employee in the event that the

employer decides to enter into a share acquisition or

business and assets acquisition.

For share acquisition

In a share acquisition, whether or not there is a

change in control of the target company, which is the

employer, such acquisition does not affect the

employment relationship between the corporate

employer and the existing employees.


In a business and asset sale, the employees of the

business are not automatically transferred to the

buyer.

The employment contracts of such employees must

first be terminated by the seller or transferred

through a contractual arrangement with the consent

of the employees by and among the seller, the buyer

and the employees. The termination and re-

employment must comply with contractual and

labour regulation requirements and procedures.

Can an agreement relating to the purchase of

shares or assets provide for a foreign governing

law? If so, are there any local laws that would still

automatically apply to the Private M&A deal?

Yes, Cambodian law does not prohibit the parties to

a contract from selecting a foreign law as the

governing law of the contract. This is the case even

if both parties to the contract are Cambodian

companies.

However, note that the Cambodian court does not

hear or apply foreign law, so if a foreign law is

chosen, it will be necessary to use the foreign court

or foreign arbitration as a competent dispute

resolution jurisdiction. Nonetheless, for a foreign

court judgment to be recognised and enforceable in

Cambodia, the country of such foreign court

judgment will need to enter into reciprocal

recognition of judgment with Cambodia, among

other conditions. Cambodia has not signed such an

agreement with any country thus far and therefore

no foreign court judgment will be enforceable in

Cambodia. Therefore, the only dispute resolution

mechanism available, if a foreign law is used as the

governing law, is foreign commercial arbitration.

The procedures for the M&A transaction (e.g.

procedures for registration of the share

transfer/subscription for new shares) and related tax

obligations as provided under the prevailing laws

and regulations still automatically apply.

Are arbitration awards enforceable in your

jurisdiction?

Yes, foreign arbitral awards are enforceable in

Cambodia.

As Cambodia is a party to the New York Convention

on the Enforcement and Recognition of Foreign

Arbitral Award (“New York Convention”), it is

possible to enforce a foreign arbitral award in

Cambodia. Prior to enforcing, the award must be

endorsed by the Cambodian appeal court.

China


China


China?

In China8, Private M&A deals are commonly done by

way of (a) share acquisition, which can be in form of

a transfer of existing shares or issuance and

subscription for new shares; and (b) business and

assets acquisition.

Mergers between two PRC-incorporated companies

are also recognised by PRC laws, but less common

in practice.

Considering the high tax rate involved in transfer of

business and assets in China, private M&A deals are

usually done by way of share transfer.


Private M&A deal?


For cross-border M&A transactions, the Ministry of

Commerce (MOFCOM) is the main regulatory and

approval authority while in recent years according to

relevant new regulations and rules regarding the

foreign investment, MOFCOM has switched from its

approval-oriented regime to a filing-and-reporting

regime in respect of cross-border M&A and foreign

investment in China. Generally speaking, foreign

investment into industries not on the negative lists

will not be subject to approval.

Apart from approving market access, MOFCOM is

also the main regulatory authority for all foreign

8 “China” or “PRC” used in this guide refers to the People’s

Repubic of China, excluding Hong Kong Special Administrative

investment transactions. This includes functions

such as granting clearance with respect to national

security for foreign investment in sensitive areas or

sectors (if necessary and applicable).

To the extent that an M&A transaction triggers

merger control filings, MOFCOM is the authority that

approves clearance filed by the affected parties.

Other approvals which are required include (a)

approval from industrial regulatory bodies, e.g. the

banking and insurance regulatory commission or the

health and family planning authority if acquiring

companies in those industries; and/or (b) the State-

owned Assets Supervision and Administration

Commission or its local agency if the target company

is a state-owned company.

Registration with the relevant authorities are also

required, including registration with the State

Administration for Market Regulation (SAMR), the

tax authority, State Administration of Foreign

Exchange (SAFE) (through the foreign exchange

designated banks, where applicable), and, where

applicable, the customs authority and other relevant

authorities.

Approvals from the internal managerial body of the

parties

Resolutions of shareholders and board of directors

adopted in accordance with the articles of

association of the target company will be required.

Approvals from other third parties

Prior consent from the relevant counterparty in the

agreement to which the target company is a party

may be required if relevant change in control clauses

are included in the agreements.

Region, Macau Special Administrative Region and Taiwan for

the purposes of this guide.

China




1. For share transfer

All rights, assets and liabilities of the target entity

will be automatically transferred to the buyer in

a share acquisition.

Exceptions may apply, for e.g. when there is a

change in the control clause in relevant

agreements entered into by the target. Such

agreements may be terminated by the counter

party.


The rights and liabilities (such as the employees,

the contracts, etc.) of the target company will not

automatically pass on to the buyer. Generally

speaking, the assets and liabilities transferred

depends on the parties’ contractual

arrangement.


and an asset sale?

1. For share transfer

Stamp duty of 0.05% of the amount recorded on

the share transfer agreement shall be paid.

If the seller is a domestic company, the amount

of the transferred shares shall be included in the

income of the seller and 25% of company

income tax will be applied to the seller’s net

income amount.

If the seller is a foreign company, withholding

income tax of 20% or 10% (if there is tax treaty

between China and the country where the

foreign company is incorporated) will be applied

to the profit of the share transfer.


The taxes for asset transfer include stamp duty,

and where applicable, value-added tax for

movable assets, deed tax for immovable assets

and value-added tax for the land and property.

Detailed tax rates will be depending on several

factors such as the types of assets, status of the

taxpayer, whether the value-added tax for the

target asset has already been deducted.

An exception will be applied when the final

receiver of assets and employees is the same

entity during a re-organization of a company in

an M&A procedure in which the company sells

all or part of its assets and business (including

the transfer of employees) as a whole through

a series of transactions. In such a case, the

value-added tax will not apply to the series of

transactions in relation to the asset transfer,

subject to the review and approval of the

relevant tax authorities.

Generally speaking, the relevant tax for asset

transfers are much higher than share transfers

- especially when transfers of land and/or

properties are involved.




Private M&A Deal?

1) For share transfer

In a share transfer, employees’ employment

relationship with the target company will remain

unchanged and therefore employee contracts

will move automatically, unless the buyer wishes

to terminate the employment contracts with the

employees in the target company.

China


In China, employees are typically not accorded

with consultation or approval rights for M&A

deals by way of share transfer.

2) For asset transfer

In an asset sale, the employees of the target

company/business are not automatically

transferred to the buyer.

In such cases, the employment contracts (with

the employee’s consent) will first be terminated

by the seller or transferred through a contractual

arrangement by and among the seller, the buyer

and the employees. The termination and re-

employment must comply with contractual and

labour regulation requirements and procedures.





1) For share transfer

For target companies which are domestic

companies, a 2006 MOFCOM regulation

stipulates that the share transfer

agreements/capital increase agreements shall

be governed by PRC laws.

For target companiess which are foreign-

invested companies, the parties may agree to

use foreign laws as the governing law for the

share transfer agreement/capital increase

agreement. However, in practice, local approval

/ company registration authorities in some cities

may require such agreements to be govered by

PRC laws.

2) For asset transfer

For movable assets, PRC law does not prohibit

the parties from selecting a foreign law as the

governing law, provided there is foreign element

involved in such transaction.

For immovable assets, the governing law shall

be PRC laws.


jurisdiction?

Yes. Foreign arbitral awards are enforceable in

China as China is a party to the New York

Convention on the Enforcement and Recognition of

Foreign Arbitral Award. However, the enforcement is

subject to the New York Convention and the local

laws in China.

Indonesia

26 © Rajah & Tann Singapore LLP 26

Indonesia


Indonesia?

In Indonesia, Private M&A deals are commonly done

by way of (a) share acquisition, which can be in form

of a transfer of existing shares or issuance and

subscription for new shares; and (b) business and

assets acquisition.


Private M&A deal?

Approvals from the internal managerial bodies of the

parties

Where a sale of shares/business by the seller (in the

form of limited liability company) constitutes disposal

of more than 50% of the seller’s net assets, prior

approval of the seller’s shareholders in general

meeting of shareholders (“GMS”) must be obtained.

Subject to provision of its articles of association,

corporate approval from the buyer’s GMS and/or

board of commissioners may also be required.

Approval from spouse

If the seller is a natural person (in case the person is

married and there is no prenuptial agreement), the

sale of shares/business shall be approved by the

spouse.

Approvals from the relevant parties

In the context of share acquisition of a target

company, should the share acquisition cause a

9 The requirement to obtain a prior approval might be changed as

it is subject to OSS regulations or guidelines (if any).

change of control in the target company, the target

company shall announce the acquisition plan (i) in

writing to its employees and (ii) in one daily

newspaper with national circulation, not less than 30

days prior to the date of invitation to convene GMS

of the target company (to approve the proposed

share acquisition). This is intended to protect the

interests of any third parties (employees or

creditors).


BKPM approval for changes to the shareholding

composition of the target company (in case the

target company is a foreign direct investment

company) is required prior to the execution of the

share acquisition.9

Upon the expiry of the 30 days’ period (above) and

the obtainment of the BKPM approval, the target

company will need to notify/request for approval

from the MOLHR of the changes to its shareholding

composition and upon such notification/request for

approval, the MOLHR will then issue a receipt of

acknowledgment/approval.



The rights and liabilities that may be automatically

transferred in Private M&A deals are different

depending on the specific type of transaction chosen

by the parties in practice. Accordingly:

Share acquisition

All rights and liabilities attached to the shares are

effectively transferred, which include rights to

receive dividends, rights to attend and vote in a

GMS, and liability for the losses incurred by the

target company (limited to the shareholding

proportion).

Indonesia



Usually the parties will novate the rights and

obligations of the seller under contractual

arrangement to the purchaser. As such, the rights

and liabilities will ordinarily be passed on to the

purchaser.

What transfer taxes are payable on a share sale?

For share transfer

1. If seller is an Indonesian resident,

a. 25% capital gain tax is applicable to a legal

entity seller

b. 5%-30% progressive tax rate is applicable to

an individual seller

2. If seller is a non-Indonesian resident, the seller

is subject to 5% tax on the transaction price

(subject to whether or not there is a tax treaty).




Private M&A Deal?

The consultation/approval rights employees have in

Private M&A deals, and the movement of employee

contracts, are different depending on the specific

type of transaction chosen by the parties in practice.

Accordingly:

Share acquisition

The contracts of the employees with the target

company would still be valid, unless the employees

opt to terminate the employment due to change of

ownership in the target company resulting from the

share acquisition.

In case the employees opt to terminate, the

employees are entitled to a statutory termination

formula of 1x severance pay, 1x long time service

pay and 1x compensation of rights pay as provided

under the Indonesian Manpower Law. Kindly be

aware that the total statutory termination formula will

depend on each employees’ years of service.

We set out each classification of the statutory

termination formula as follows:

1. Severance pay:

Period of

Employment

Severance

Payment

Less than 1 year 1 month salary

1 -2 years 2 months salary



4-5 years 5 months salary




8 years or more 9 months salary

2. Long service pay:

Period of

Employment

Severance

Payment








24 years or more 10 months salary

3. Compensation:

a. replacement of unused annual leave;

b. reimbursement of transportation costs for

employees and their families to new working

place for a new employer;

Indonesia


c. reimbursement for the housing and medical

expenses equal to 15% of the severance

pay and/ or long service pay; and

d. other provisions that are provided and

agreed upon in the collective labour

agreement or company regulations.

Assets acquisition

In an asset acquisition, the contracts of the

employees would typically be novated by the seller

to the purchaser as opposed to the termination of the

employments by the seller.





Yes, parties may provide for the agreement to be

governed by foreign law. Under Indonesian law,

parties to an agreement are free to choose the law

which governs their agreement provided that the law

chosen has sufficient relationship with the

agreement and provided that the choice of law is not

contrary to public order in the Republic of Indonesia.

The procedures for the M&A transaction (e.g.

procedures for share transfer/subscription for new

shares) as provided under the prevailing laws and

regulations still automatically apply.


jurisdiction?

Yes, arbitration awards are enforceable in

Indonesia, subject to requirements.

Specifically, on foreign arbitration awards, Indonesia

is a party to the New York Convention, as evidenced

by the enactment of Law No. 30 of 1999 on

Arbitration and Alternative Dispute Resolutions

("Law No. 30/1999"). Law No. 30/1999 provides

requirements to enforce such awards, i.e.:

1. the award is rendered by an arbitration body or

an arbitrator in a country which is bilaterally

bound to the Republic of Indonesia or jointly

bound with the Republic of Indonesia by an

international convention on the recognition and

enforcement of foreign arbitration awards. Its

enforcement is based on the principle of

reciprocity;

2. the foreign arbitration awards are only limited to

awards, which according to the laws of the

Republic of Indonesia, fall within the scope of its

commercial law;

3. the foreign arbitration awards do not contravene

the public order in the Republic of Indonesia;

and

4. foreign arbitration award may be enforced in the

Republic of Indonesia after an exequatur (writ of

execution) has been obtained from the

Chairman of the Central Jakarta District Court.

Lao PDR


Lao PDR

How are Private M&A deals commonly carried

out in Lao PDR?

In Lao PDR, Private M&A deals are commonly done

in the way of (a) acquisition of assets; and (b) share

transfer.

What are the regulatory approvals required for a

Private M&A deal?

If all or any part of the shares of a company are

transferred to another person, the following

regulatory approvals are required:

Approval from the internal managerial body of the

parties

Prior resolutions passed by the company’s

shareholders approving the Private M&A deal must

be adopted by special resolution.

Approval from the authorities

The share transfer must be approved by the Ministry

of Industry and Commerce for general business.

For the concession business which is governed by

concession agreement entered into between the

investor and the State, represented by Ministry of

Planning and Investment, transfer of shares in the

project company, shall be approved by Ministry of

Planning and Investment in its capacity of the party

to the concession agreement.

Prohibition on foreign shareholding

The Announcement No. 1328/MOIC dated 13 July

2015 issued by Ministry of Industry and Commerce

provides for a List of Reserved Businesses for Lao

Citizens or the prohibition on foreign shareholding as

follows:

1. Agriculture, Forestry and Fishery: Gathering of

non-wood forest products (for this ISIC is

reserved specifically for the exploitation of

natural medicines).

2. Manufacturing:

a. Weaving of textiles (for this ISIC is reserved

specifically for weaving including the pattern

design, patterning, and other handicraft);

b. Knitting and sewing of textiles (for this ISIC

is reserved specifically for the sewing of Lao

textiles with ancient and unique ethnic

pattern);

c. Manufacturing of other wood products,

manufacture of articles from cork, straw and

plaiting materials (for this ISIC is reserved

specifically for the small family wood factory,

wood sculpturing and plaiting with ancient

and unique ethnic pattern);

d. Services activities related to printing (for this

ISIC is reserved specifically for the photo

printing);

e. Manufacturing of other porcelain and

ceramic products (for this ISIC is reserved

specifically for the manufacture of Lao

traditional porcelain with ancient and unique

ethnic pattern);

f. Manufacturing of jewelry and related articles

(for this ISIC is reserved specifically for

manufacturing of Lao handicraft with ancient

and ethnic unique pattern); and

g. Manufacturing of imitation jewelry and

assembled articles (for this ISIC is reserved

specifically for manufacturing of Lao

Lao PDR


handicraft with ancient and ethnic unique

pattern).

3. Supply of Electricity, Gas, Steam and Air

Conditioning: Electric power generation,

transmission and distribution (for this ISIC is

reserved specifically for the hydropower project

with a capacity of less than 15 Megawatt in Lao

PDR as a no concessions project).

4. Construction:

a. Electrical installation (for this ISIC is

reserved specifically for the electrical

installation inside a building); and

b. Installation of water pipes, heaters and air-

conditioners (for this ISIC is reserved

specifically for the installation of water pipes

in a city, water supply system and air

conditioning system in a building).

5. Wholesale and Retail Trade; Repair of Motor

Vehicles and Motorcycles:

a. Non-specialised wholesale trade (i.e.

wholesale business with registered capital

of less than 4 billion kip); and

b. Other retail in non-specialised stores (i.e.

retail business with registered capital of less

than 4 billion kip).

6. Transportation and Warehouse:

a. Urban or suburban passenger land

transportation;

b. Other passenger land transportation (except

for taxi meter services); and

c. Services activities incidental to land

transportation (for this ISIC is reserved

specifically for the public transport stations).

7. Accommodation and Food Service Activities:

Short term accommodation services (for this

ISIC is reserved specifically for the

guesthouses, resorts, hotels that are graded

less than 3 stars).

8. Information and Communication:

a. Publishing of newspapers, articles and

magazines;

b. Other publishing activities (for this ISIC is

reserved specifically for the establishment of

printing companies);

c. Songs publishing and sounds recording;

d. Radio broadcasting (for this ISIC is reserved

specifically for the establishment of

community radio stations); and

e. Television programming and broadcasting

(for this ISIC is reserved specifically for the

establishment of community television

stations).

9. Financial and Insurance Activities:

a. Trusts, funds and similar financial entities

(for this ISIC is reserved specifically for the

establishment of trusts, non-deposit

microfinance, loan and savings union); and

b. Other credit granting (for this ISIC is

reserved specifically for a pawn shop

business).

10. Professional, Scientific and Technical Activities:

a. Architectural and engineering activities and

related technical consultancy (for this ISIC is

reserved specifically for the consultancy on

surveying, design, construction and

architectural installation, Lao engineering

services related to history, nature and

Lao PDR


culture and design, construction and

installation of 22kv-35 kv and below 0.4 kv

electrical distribution network); and

b. Other professional, scientific and technical

activities (for this ISIC is reserved

specifically for Lao language translation

business).

11. Administrative and Support Service Activities:

a. Activities of employment placement

agencies (employment agencies);

b. Other reservation services and related

activities (for this ISIC is reserved

specifically for some specific tourist

attractions); and

c. General cleaning of buildings.

12. Education:

a. Technical and vocational education (skill

development center, except technical and

vocational school, technical college in order

to support the national education system

phase 2 from 2011-2015); and

b. Other education services not specify

elsewhere (for this ISIC is reserved for Lao

language teaching for foreigners).

13. Human Health and Social Work Activities: Other

human health activities (for this ISIC is reserved

specifically for each type, each characteristic

and each level across country of private medical

clinics).

14. Other Service Activities:

a. Repair of footwear and leather goods;

b. Washing and dry-cleaning of textiles and fur

products;

c. Hair dressing and other beauty treatment

(not surgery activities);

d. Funeral and related activities; and

e. Other site decoration activities (for this ISIC

is reserved specifically for the site

decoration, and sound and lightings system

installation).

Conditional businesses

The Announcement No. 1327/MOIC dated 13 July

2015 issued by Ministry of Industry and Commerce

provides for a List of Conditional Business for

Foreign Investment which require minimum Lao

shareholding or minimum registered capital as

follows:

1. Manufacturing:

a. Manufacturing of other food products not

classified elsewhere:

i. Registered Capital (Lao Kip): More

than 1 billion; and

ii. Foreign Equity Participation: 20%.

b. Manufacturing of pharmaceuticals,

medicinal chemical and botanical products:

i. Registered Capital (Lao Kip):

More than 1 billion; and


2. Construction:

a. Road and Railway Construction, for this

ISIC is specifically for construction of roads

and bridges for joint venture between

domestic and foreign investors:

Lao PDR


i. Registered Capital (Lao Kip): 1 –

240 billion; and


b. Road and Railway Construction, for this

ISIC is specifically for construction of roads

and bridges for wholly owned foreign

investment:


than 240 billion; and


c. Site preparation for construction, for this

ISIC is specifically for clearing construction

sites (excavation and landfill) for small

project:

i. Registered Capital (Lao Kip): 8 – 40

billion; and


d. Site preparation for construction, for this

ISIC is specifically for clearing construction

sites (excavation and landfill) for big project:




e. Other construction installation, for this ISIC

is specifically for assembling of building

parts for small project:


billion; and


f. Other construction installation, for this ISIC

is specifically for assembling of building

parts for big project:




g. Completing and finishing buildings, for this

ISIC is specifically for interior and exterior

design/decorating (final phase) for small

project:


billion; and


h. Completing and finishing buildings, for this

ISIC is specifically for interior and exterior

design/decorating (final phase) for big

project:




3. Wholesale and Retail Trade; Repair of Motor

Vehicles and Motorcycles:

a. Maintenance and repair of motor vehicles

(for this ISIC is specifically for establishment

of garage for vehicle and mechanical

repairs):


than 1.5 billion; and


b. Non-specialised wholesale trade (i.e.

wholesale business):

Lao PDR


i. Registered Capital (Lao Kip): From

4 to less than 10 billion; and


c. Non-specialised wholesale trade (i.e.





d. Non-specialised wholesale trade (i.e.





e. Other retail in non-specialised stores (retail

business):




f. Other retail in non-specialised stores (retail

business):




g. Other retail in non-specialised stores (retail

business):




4. Transportation and Warehouse:

a. Other passenger land transport (for this ISIC

is specifically for taxi meter services):


than 5 billion; and


b. Freight transport through highway, for this

ISIC is specifically for domestic freight

transportation:


than 3 billion; and


c. Freight transport through highway, for this

ISIC is specifically for international or cross

boarder freight transportation:


than 5 billion; and


d. Warehousing and storage (for this ISIC is

specifically for warehousing and storage

services):


than 1 billion; and


e. Service activities incidental to land

transportation, for this ISIC is specifically for

domestic freight stations:


than 5 billion; and


Lao PDR


f. Service activities incidental to land

transportation, for this ISIC is specifically for

international and cross border freight

stations:




g. Other transport support activities, for this

ISIC is specifically for domestic freight

transportation:


than 3 billion; and


h. Other transport support activities, for this

ISIC is specifically for international freight

transportation:


than 3 billion; and


5. Accommodation and Food Service Activities:

Short term accommodation activities (3-5 star

hotels):


than 1 billion; and


6. Financial and Insurance Activities:

a. Other monetary intermediation, for this ISIC

is specifically for establishment of a bank

(commercial bank):

i) Registered Capital (Lao Kip): More

than 300 billion (domestic-foreign);

and

ii) Foreign Equity Participation: As

agreed among shareholders.

b. Other monetary intermediation, for this ISIC

is specifically for a branch of a bank:

i) Registered Capital (Lao Kip): More


ii) Foreign Equity Participation: As


c. Other monetary intermediation, for this ISIC

is specifically for a Micro-finance institution:


than 3 billion (domestic-foreign);

and

ii. Foreign Equity Participation: As


7. Professional, Scientific and Technical Activities:

a. Architectural and engineering activities and

related technical consultancy, for this ISIC

conditions are specifically for research and

feasibility study of a project:

i. Registered Capital (Lao Kip): 4-8

billion (a small project) or more than

8 billion (a big project); and


b. Architectural and engineering activities and


conditions are specifically for surveying and

urban planning:

Lao PDR






c. Architectural and engineering activities and


conditions are specifically for interior and

exterior design/decoration:





d. Architectural and engineering activities and


conditions are specifically for construction

consultancy:





e. Architectural and engineering activities and


conditions are specifically for surveying,

design and civil engineering:





f. Technical testing and analysis (for this ISIC

is specifically for the establishment of a

vehicle technical inspection center):


than 1 billion; and


8. Education:

a) Other education not classified elsewhere,

for this ISIC is specifically for an automobile

driving school:


than 8 billion; and


b) Other education not classified elsewhere,

for this ISIC is specifically for a motorcycle

riding school:




Human Health and Social Work Activities: Other

human health activities (for this ISIC is specifically

for medical and traditional medical business):


than 1 billion; and




The following rights and liabilities are automatically

transferred in a Private M&A deal:

3. shareholders’ rights under the company’s

articles of association;

4. liabilities under employment contracts; and

5. contracts that the company is party to.

Lao PDR



and an asset sale?

The transfer taxes levied on Private M&A deals are

different depending on the specific type of

transaction chosen by the parties in practice.

Accordingly:

For share transfer:

10% income tax is payable on surplus proceeds of

the share transfer.

For asset sale:

1. no tax on the transfer of land use rights,

buildings, or land with buildings, which have

been recorded in the balance sheet of a

business unit that pays taxes in accordance with

the accounting system.

2. transfer of the assets other than the land and

building, income tax at the rate of 10% of

acquisition proceeds is payable.


employees have in a Private M&A Deal? Are

employee contracts automatically transferred in

a Private M&A Deal?

Generally local employment legislation does not

provide employees with consultation or approval

rights for M&A deals.

However, Lao labour law imposes an obligation on

the former employer to give written notice to all

employees that will be transferred. In addition, the

former and new employers shall determine their

respective responsibilities to ensure that the

employees’ interests are protected under the law.




automatically apply to the deal?

Yes, parties may provide for the agreement to be

governed by foreign laws.

However, Lao enterprise law and tax law still

automatically apply to the deal.


jurisdiction?

Yes, as Lao PDR is a party to the New York

Convention, arbitration awards issued in states that

are also parties to the New York Convention will be

enforceable.

Malaysia


Malaysia


Malaysia?

In Malaysia, Private M&A deals are commonly done

in the way of:

1. Share sale

Generally, a share sale is the more common form of

a private M&A transaction in Malaysia as there is no

disruption to the business.

However, in a share sale, the acquirer will generally

inherit all the assets and liabilities owned by the

target company.

Asset sale

The advantage of an asset sale is that the acquirer

may pick and choose the assets (or liabilities) he

wishes to acquire, as compared to the share sale

approach.

One of the disadvantages of an asset sale over a

share sale is that every asset and liability will have

to be individually transferred to the acquirer, a

process which may be subject to third party

approvals or which takes time and/or may cost more

in terms of stamp duty payable on the asset transfer.

Additionally, a separate entity will need to be set up

to acquire the assets and liability to be acquired.

Malaysia also has prescriptive employment laws,

which favour employees earning below

RM2,000/month (“EA Employees”), that regulate

the transfer of employees in an asset sale.


Private M&A deal?


Generally, a regulator’s approval is not required to

be obtained in a private M&A deal, except for:

1. Regulated sectors

When the target to be acquired operates in a

regulated sector, regulatory approval is required. For

instance, an acquisition of a company in the financial

services or insurance sector is subject to Bank

Negara Malaysia’s approval.

Licenses requiring regulator’s approval

The target may have been issued with a licence

which requires the target to obtain a regulator’s

approval before a change in its shareholders is

permitted, failing which the licence issued could be

revoked, e.g. telecommunication licences.

Some asset sales:

In an asset sale, the type of regulatory approvals

required would depend on the specific asset

transferred. For example, the prior approval of the

State Authority may be required for foreigners to

acquire any real property.

Additionally, since most regulatory licences issued

are non-transferrable, an acquirer via an asset sale

would have to apply for new licences from the

relevant authorities before it may carry on any

regulated business activities.



For share sale:

In a share sale, the acquirer will acquire shares in

the target company to be acquired. All the assets

Malaysia


and liabilities of the target remains the same post-

acquisition, unless hived off pre-completion.

For asset sale:

In an asset sale, only the assets and liabilities which

the acquirer has elected to acquire will be

transferred, so there is no automatic transfer of all

assets and liabilities of that business.

For example, if a debt is not transferred to the

acquirer in an asset sale, the right to collect the debt

remains with the seller of the business.

Sellers must also ensure that EA Employees are

offered employment with the acquirer on terms no

less favourable than their existing terms.


and an asset sale?

Stamp duty is payable on an instrument of transfer

as follows:

For share sale:

In a share sale, stamp duty is payable on the

instrument of transfer at the rate of 0.3% on

whichever is the higher of

a. consideration/purchase price; and

b. value of the shares, as adjudicated by the

Stamp Office.

Real property gains tax (“RPGT”) is also payable on

a disposal of the shares of a company classified as

a “real property company”. The tax rates range

between 5% and 30% depending on the length of the

duration the asset has been acquired before the

disposal.

For asset sale:

In respect of an asset sale, stamp duty is payable on

an instrument of transfer. As such, any transaction

which requires an instrument to effect the

transaction will be subject to stamp duty and the rate

of stamp duty payable would depend on the nature

of the instrument.

In relation to real property, RPGT is payable on a

disposal of real property. The tax rates range

between 5% and 30% depending on the length of the

duration the asset has been acquired before the

disposal.




Private M&A Deal?

Generally, Malaysian employment laws do not


rights for M&A deals unless specifically provided for

in the employees’ terms of employment whether by

way of a collective agreement or otherwise.

The movement of employment contracts is different


by the parties. Accordingly:

For share sale:

In a share sale, from the perspective of employees

of a target company, their employer, and the terms

of their employment contract, remains the same.

For asset sale:

In an asset sale, the employees of the business are

not automatically transferred to the acquirer.

The employment contracts of such employees must

first be terminated by the seller and the acquirer (if

he wishes) needs to re-employ them under new

contracts of employment. The termination and re-

employment must comply with legislative and

contractual requirements and procedures, failing

Malaysia


which the seller may be liable to pay statutory

compensation and/or damages.





Yes, parties can provide for the agreement to be

governed by foreign law.

Malaysian law recognises freedom to contract

including freedom of choice of governing law. This,

however, is not absolute and is subject to

exceptions, including whether a foreign law is

chosen with the intention of circumventing or

contracting out of statutory requirements, or is held

to be against public policy, in which case Malaysian

law will still apply.

However, as a foreign governing law merely affects

the interpretation of a contract, the parties must still

comply with all the other aspects of Malaysian law.

For example, if stamp duty is payable on a share

transfer form, this will need to be complied with,

failing which the penalties and consequences

provided under the Stamp Act would apply.

Alternatively, if a regulator’s approval is required for

the acquisition, this will still need to be obtained.


jurisdiction?

Yes, since Malaysia is a party to the New York

Convention, arbitration awards issued in states that

are also parties to the Convention will be

enforceable in Malaysia.

Myanmar


Myanmar


Myanmar?

In Myanmar, Private M&A deals are commonly done

in the way of (a) share purchase; and (b) asset

purchase.

Asset purchase may be preferable where there are

issues with transferring shares to a foreigner. Such

issues may arise where the target company is a local

Myanmar company and its shares are not allowed to

be transferred to foreigners, or where the target

company owns land (as foreigners are not allowed

to own land).


Private M&A deal?


For share purchase:

Myanmar Investment Commission approval is

required for any transfer of majority shares of

investors in companies established under the

Myanmar Investment Law 2016.

For all share transfers, an application must be made

to register the share transfer with the Directorate of

Investment and Company Administration and the

share transfer form must be filed with the Companies

Registration Office.

For asset purchase:

The regulatory approvals required for the transfer of

assets are dependent on the assets in question. For

example, if licences are required to be transferred,

approval of the relevant supervising authority that

issued the licence would need to be obtained.

Myanmar Investment Commission approval is

required for any transfer of more than 50% of the

assets owned by the investors of the companies

established under Myanmar Investment Law 2016.

Approval from Competition Commission

A new Myanmar Competition Law was introduced in

February 2015, under which the Competition

Commission's approval is required to be obtained in

some cases. The Myanmar Competition

Commission was established on 31 October 2018,

and is chaired by the Union Minister for the Ministry

of Commerce.

Under the Myanmar Competition Law, “mergers of

businesses” or “joint ventures or acquisitions” which

create excessive market dominance or has the

intention of reducing competition are prohibited.

There is currently no guidance in respect of how

“excessive market dominance” or “reducing

competition will be determined, and as such, any

merger or acquisition should undertake some

degree of assessment prior to completion.







For share purchase:

In an acquisition through a share purchase, all the

assets, liabilities and obligations of the target entity

will automatically be acquired.

Myanmar


However, third party consents are required for

contracts subject to change of ownership

restrictions.

For asset purchase:

In an acquisition through an asset purchase, only the

assets and liabilities which the buyer agrees to

obtain, and which are identified are acquired. Third

party consents are required for contracts containing

no-assignment prohibitions.


and an asset sale?

For share purchase:

Stamp duty of 0.1% of the value of the shares being

transferred is payable.

Capital gains tax of 10% is payable where the total

value of the capital assets disposed of within one

year exceeds MMK 10 million. This does not apply

to transfers of capital assets in respect of oil and gas

companies, where tax rates ranging from 40% to

50% apply instead.

For asset purchase:

For lease agreements between one and three years,

stamp duty of 0.5% of the average annual value of

rent is payable. For lease agreements exceeding

three years, the stamp duty rate is reduced from 3%

to 2% (on the average annual value of rent).

Furthermore, lease premium paid in addition to the

annual lease rental is also subject to 2% stamp duty

on the total value of the premium.

All values of immovable property transfers are

subject to stamp duty of 2%, plus an additional 2% if

the immovable property is located in Yangon, Nay

Pyi Taw or Mandalay.

Capital gains tax mentioned above for share

transfers is also applicable for asset transfers.




Private M&A Deal?

Generally, local employment legislation does not


rights for M&A deals.

The movement of employment contacts is different



For share purchase:

For share purchases, employee contracts will

remain with the target, unless there are terms in the

contract to the contrary.

For asset purchase:

For asset purchases, employees' consents are

required for transferring their employment contracts

to a new entity. If an employee does not consent to

being employed by the new employer, a severance

payment of between one month’s pay and five

months’ pay will need to be made to him, depending

on the length of employment.





Yes, the parties may provide for the agreement to be

governed by foreign law.

Notwithstanding the choice of foreign governing law,

the following local Myanmar laws will still be

applicable:

1. State Owned Economic Enterprises Law, under

which certain activities are reserved for the state

or may be undertaken only through joint

ventures with government-owned entities

Myanmar


2. Myanmar Investment Law 2016 and Myanmar

Companies Law 2017, which contain foreign

ownership restrictions

3. Transfer of Immovable Property Restriction Act

1987, which prohibits foreign ownership of land

and property

4. Myanmar Stamp Act and Law Amending the

Stamp Act, which prescribes the stamp duty

payable on transfer of assets (as described

above)

5. Union Tax Law 2018, which prescribes the

capital gains tax payable (as described above)

Apart from the above, other laws specific to the

sector in which a business operates may also be

applicable.


jurisdiction?

Myanmar’s Arbitration Law 2016 covers both

arbitration proceedings in Myanmar and the

enforcement of domestic and foreign arbitral awards

in Myanmar. As Myanmar has acceded to the New

York Convention in 2013, Myanmar’s Arbitration Law

provides procedures to recognise and enforce

foreign arbitral awards made in member countries.

Philippines


Philippines


Philippines?

Share sale:

Share sales are a common method of doing a

Private M&A deal in Philippines because it is simpler

to implement.

Asset sale:

This is preferred in instances where, amongst other

concerns, there is a need to manage liabilities, such

as contingent tax liabilities.


Private M&A deal?


In general, no approval is required from authorities

for a Private M&A deal, unless the structure of the

deal will involve amendments to the articles of

incorporation and bylaws of any of the parties to the

deal, or foreign investment into a corporation that will

exceed 40% of the equity, which will require

regulatory approvals.

Under the Philippine Competition Act of 2015,

parties to a Private M&A deal that meets the size of

party and value of transaction thresholds are

required to notify and seek clearance from the

Philippine Competition Commission (PCC).

For share sale:

In a share purchase, the approval of the tax

authorities is required prior to the registration of the

transfer of the shares in the books of the corporation.

The approval is a confirmation that the correct taxes

have been paid for the transfer of the shares.

For asset sale:

In an asset purchase of land, the approval of the tax

authorities must be obtained prior to the transfer of

the title of the property in the name of the purchaser.

The approval is a confirmation that the correct taxes

have been paid for the transfer of the land.

Approval from the internal managerial body of the

parties

In an asset purchase which involves the sale of all or

substantially all of the assets of a corporation, the

authorisation of the stockholders representing at

least two-thirds of the outstanding capital stock is

required. Further, the sale may trigger the appraisal

rights of the dissenting stockholders.

Approval from the relevant parties

In an asset purchase which involves the sale of all or

substantially all of the assets of a corporation, the

operation of the Bulk Sales Law may be triggered.

This requires, among others, notice of the sale to the

creditors and, in certain instances, payment of all

debt to creditors or waiver of payment by the

creditors.







For share sale:

In a share sale, the transferee generally does not

become liable for the obligations of the corporate

enterprise under the doctrine of separate juridical

Philippines


personality, unless either the transferee assumes

the obligations through contract or there is basis to

discard the separate juridical personality of the

corporation.

For asset sale:

In an asset transfer, the transferee is not liable for

the debts and liabilities of the transferor, except

where the transferee expressly or impliedly agrees

to assume such obligations.


and an asset sale?

The transfer taxes payable on Private M&A deals are



Accordingly:

For share sale:

In a share sale, the capital gains tax for the sale of

shares of stock not traded in the stock exchange is

15% of the net capital gains.

A documentary stamp tax of PhP 1.50 on each PhP

200.00 of the par value of such stock shall be paid

on the sale.

For asset sale:

In an asset only transfer, the transferor is liable for

the regular corporate income tax on the sale of the

assets.

A value-added tax of 12% is generally imposed on

the sale of assets used in the business of the

corporation.




Private M&A Deal?

The employees generally have no consultation or

approval rights in a Private M&A Deal.

The movement of employment contracts is different



For share sale:

In a share sale, since the result of the transaction

may only be a change in control of the corporate

employer, there is no change in the relationship

between the corporate employer and the existing

employees.

For asset sale:

In an asset transfer, the transferee is not bound to

retain the employees of the transferor, unless the

transferee has contractually undertaken to retain the

employees of the transferor corporation.






governed by foreign law. Parties are generally free

to come to an agreement and stipulate what law

should govern their contractual rights and duties in

the absence of prohibitive law or public policy

providing otherwise.

However, there is a risk that courts will apply local

Philippine law when the choice-of-law has no or very

limited connection with the transaction or the

contracting parties.


jurisdiction?

Yes, foreign arbitral awards are recognised and

enforced in the Philippines. As Philippines is a party

to the New York Convention, any party to a foreign

Philippines


arbitration may petition a Philippine court to

recognise and enforce a foreign arbitral award made

a country that is also a party to the New York

Convention.

However, the court may, upon grounds of comity and

reciprocity, recognise and enforce a foreign arbitral

award made in a country that is not a signatory to the

New York Convention as if it were a Convention

Award, if such country extends comity and

reciprocity to awards made in the Philippines. If that

country does not extend comity and reciprocity to

awards made in the Philippines, the court may

nevertheless treat such award as a foreign judgment

enforceable under the Philippine Rules of Court.

Singapore


Singapore


Singapore?

In Singapore, Private M&A deals are commonly

done in the form of a share acquisition or an asset

sale and purchase. The decision to make a share or

asset purchase is usually influenced by factors such

as the characterisation of gains as either revenue or

capital, the amount of stamp duty payable on asset

purchases and share purchases and the complexity

of the deals involving the transfer of assets.

Private M&A deals are largely unregulated by

statutory laws and parties are free to dictate the

terms and conditions in the sales or purchases and

they are mainly driven by commercial

considerations. Nevertheless, Private M&A deals in

Singapore share similar basic features and

components with deals in other jurisdictions.

What are the approvals required in a Private M&A

deal?


In general, no regulatory approval is required in a

Private M&A deal.

Targets in certain industries that are regulated, such

as insurance, banking, finance and mass media,

may be subject to share ownership restrictions.

In addition, anti-trust clearance from the Competition

& Consumer Commission of Singapore may be

necessary if the merger or acquisition would, or is

expected to, result in a substantial lessening of

competition within a particular market for goods or

services in Singapore.

Approvals from the internal managerial bodies of

parties

The sale of businesses or shares requires the prior

approval of the company’s board of directors and/or

its shareholders.

Approvals from the relevant parties

Prior consents of existing customers, suppliers,

lenders, partners or landlords may be required to

ensure minimal disruption to the business.







For share acquisition:

For acquisition of shares, an acquirer automatically

acquires all the rights, assets and liabilities of the

target entity.

The acquirer should however note that certain

regulatory licences and/or contracts of the target

entity may contain change-in-control clauses which

may automatically invalidate or terminate the licence

or contract depending on the specific clause in

question.

For asset sale and purchase:

For sale and purchase of assets, the rights and

liabilities of a target entity will not automatically pass

on to the acquirer unless the acquirer opts to

assume such rights or liabilities. Otherwise, the

rights and liabilities will remain with the target entity.

Singapore



and an asset sale?

For share sale:

On a sale of shares, stamp duty is payable on each

instrument of transfer at the rate of 0.2% on the

higher of (i) the purchase price and (ii) the net asset

value of such shares.

For asset sale:

Stamp duty is only payable on transfer of shares (as

above) and real property at the rate of approximately

3% on the higher of (i) the purchase price and (ii) the

current market value of the property.




Private M&A Deal?

In Singapore, employees are typically not accorded

with consultation or approval rights for M&A deals.

However, collective agreements with trade unions

may sometimes require employers to consult the

respective trade unions (or bodies) prior to the sale

of shares or assets.

In a Private M&A deal involving the transfer of a

business or part thereof, the employment contracts

of all employees who are covered under Section 18A

of the Employment Act will be automatically

transferred to the acquirer or new employer. This

includes employees in managerial or executive

positions whose salaries are up to S$4,500. The

foregoing does not apply to a sale of assets on a

piecemeal basis.

Section 18A provides that there will be an automatic

transfer, with no break, in the continuity of

employment, and on the same terms and conditions

enjoyed by the employee prior to the sale unless the

employee and the employer agree otherwise.

The statutory novation and consultation procedures

mentioned above do not apply to managers and

executives whose salaries are above S$4,500. If the

purchaser of the business wishes to hire any such

employees, their employment contracts will have to

be terminated and new employment contracts will

have to be offered on such terms as the purchaser

and such employees may agree. As such, transfer

of their employment is entirely a matter of contract

under Singapore law.






governed by a foreign law. However, certain

provisions and statutory requirements may not be

circumvented with the choice of a foreign law.

One example is the transfer of employees under

Section 18A of the Employment Act. An asset

transfer involving the transfer of the assets or

employees of the target entity will still have to be in

compliance with Singapore laws despite the choice

of foreign law.

Are arbitral awards enforceable in your

jurisdiction?

Yes, arbitral awards are enforceable in Singapore.

Enforcement of international arbitral awards in

Singapore is provided for in the International

Arbitration Act, which gives effect to the New York

Convention.

International arbitral awards made in Singapore and

outside Singapore may, by leave of the Singapore

High Court, have the same effect as judgments of

Singapore Courts unless, amongst other things, they

are deemed contrary to the public policy of

Singapore.

Thailand


Thailand


Thailand?

There are generally three types of private M&A deals

in Thailand, namely, an amalgamation, a share

acquisition and an asset acquisition, but the most

common way to acquire a private limited company is

by way of a share acquisition or an asset acquisition.


Private M&A deal?

Approval from the authorities:

In general, there is no requirement to obtain

governmental approval for a private M&A deal.

Approval from the Trade Competition Commission:

The Trade Competition Act B.E. 2560 (2017) and implementing Notifications on merger control set out certain regulatory requirements where a merger satisfies the specified thresholds. Post-merger notification:

A post-merger notification is required when a business operator engages in a merger that may cause substantial reduction of competition in a particular market and must notify the Trade Competition Commission (Commission) of the

merger within seven days.

A ‘substantial reduction of competition’ is defined by the Commission as a merger which has (1) a sales revenue of THB1,000 million or more, and (2) does not meet the requirements of having a ‘monopoly’ or being a business operator with ‘market dominance’

in the market, as discussed below. This sales revenue includes the sales revenue of all the business operators which are related in terms of policy or commanding power.

Pre-Merger Approval: A pre-merger approval is required where the merger may result in a ‘monopoly’ or a business operator with ‘market dominance’. For the merged company to hold a ‘monopoly’ on the market, it must have the power to fix the price and quantity of its goods or services independently and have a sales volume of THB1,000 million, or more. The threshold for a business operator to have

‘market dominance’ is more complex, requiring

either: (1) a business operator having a market

share of 50% or more and having sales volume of

THB1,000 million, or more, in the preceding year; or

(2) the first three business operators in a market of

any goods or services having an aggregate market

share of 75% or more and each having sales volume

of THB1,000 million or more in the preceding year.

However, this ‘market dominance’ threshold will not

apply to a business operator having the market

share in the preceding year lower than 10%.








In the case of a share acquisition, all rights and

liabilities of the target company are automatically

transferred to the purchaser.

For asset acquisition:

In the case, however, of an acquisition of assets, the

purchaser would not assume the liabilities of the

target company (except in the case of an entire

Thailand


business transfer, where certain liabilities would be

transferred).


and an asset sale?

The transfer taxes payable on Private M&A deals are



Accordingly:


The taxes applicable to a share acquisition are

corporate income tax, withholding tax and stamp

duty.


The taxes applicable to an asset acquisition are

corporate income tax, specific business tax

(applicable to sale of real estate only), value added

tax (VAT), withholding tax, and stamp duty.

However, there are exemptions in certain

circumstances, for example, the Revenue

Department currently grants a tax exemption in the

form of specific business tax, including stamp duty

and VAT for the transfer of an entire business.




Private M&A Deal?

The transfer of employee contracts is different




A share acquisition causes a change in the

shareholding structure of the target company,

without having an impact on the target company’s

employees. In general, therefore, there would be no

requirement to obtain the employees’ approval for

the share acquisition because the employer remains

the same.

There is a small chance that the employees may

argue that there is a change of employer on the basis

that there is a change of control. It is recommended

that the employees be informed of the change of

control in writing.


In the case of an asset acquisition, the transfer of

employment would not occur automatically. An asset

acquisition would affect the employment relationship

between the transferor and its employees in that

there would be a change of employer. As a result,

the employees’ prior written consent must be

obtained for the transfer of their employment to be

valid and effective.






governed by foreign law. Under the Act on Conflict

of Laws 1938, the parties to an agreement are free

to choose the governing law of their agreement. The

choice of a foreign law to govern the terms of an

agreement is enforceable in Thailand to the extent

that the provisions of foreign law are not contrary to

Thai public policy.

The party seeking to rely upon a foreign law would

be required to prove the existence of that foreign law

to the satisfaction of the Court and that the foreign

law provisions being relied upon are not contrary to

Thai public policy. Thai public policy is a wide and

undefined term, giving the courts substantial

discretion when deciding on the issue.

Commercial terms in an agreement are not generally

deemed to be contrary to Thai public policy, except

where they are clearly contrary to Thai law, for

Thailand


example, a provision in an agreement which allows

a creditor to charge compound interest immediately

upon default.

However, Thai law would apply to matters relating to

the form of the transaction as required by relevant

laws, for example, the requirement for the

registration of transfer of land, and the requirement

for a transfer of shares to be evidenced by a signed

written instrument and entry in the share register

book of the company.


jurisdiction?

Yes, Thailand is a party to the New York Convention

and as a result, a final arbitral award issued in a

country that is a party to the New York Convention

would generally be enforceable in Thailand.

Vietnam


Vietnam


Vietnam?

In Vietnam, Private M&A deals are commonly done

in the way of:

Share/Capital Contribution transfer:

The transfer depends on the enterprise form of the

target company to be acquired by the investor. If the

target company is a joint stock company, the deal

will be done by way of share transfer. If the company

is a limited liability company, the deal will be done by

way of capital contribution transfer (or as named

under Vietnamese law, capital contribution

assignment).

Asset transfer:

An asset transfer can be done when the investor

does not want to inherit the rights and obligations of

the target company, but just to obtain its assets

and/or the business.

Merger:

A company (the “Target Company”) transfers all

lawful assets, rights and obligations and interests to

another company which survive the merger (the

“Surviving Company”), and then the existence of

the Target Company is terminated.

Consolidation:

Two or more companies are consolidated into a new

one and the existence of the former companies are

terminated.

Division/Separation:

a. The transferor company may divide

shareholders/members, and assets of the

company to establish two new companies

or more (the transferee companies) in one

of the following cases:

i. Part of stakes/shares of

members/shareholders and an amount

of assets proportional to the value of

stakes/shares are transferred to the

transferee companies according to

their holding in the transferor company

and corresponding to the value of

assets transferred to the transferee

companies;

ii. All of stakes/shares of one or some

members/shareholders and an amount

of assets proportional to the value of

stakes/shares are transferred to the

transferee enterprises;

iii. A combination of both cases as

mentioned above.

Upon the completion of the division, the

existence of the transferor company shall

be terminated.

b. A transferor company may be partially

divided by transferring part of its existing

assets, rights and obligations to establish

one or some new companies without

terminating the existence of the

transferor company.

After the division or separation, the shares

of the target company will be transferred

to the investor.

Vietnam



Private M&A deal?

Subject to the nature of transaction, the regulatory

approvals required in a Private M&A deal are

generally as follows:

a. Acquisition/Subscription approvals

i. For the transfer of shares or capital

contribution to foreign investors, the

acquisition/subscription approvals of the

competent licensing authority shall be

obtained as an in-principle approval of the

competent authority for foreign investors

to invest in the target company by way of

acquisition/subscription of shares or

capital contribution.

ii. For transfer of real estate assets, an in-

principle approvals of a competent

licensing authority must be obtained as

the approval for the transferring of the

rights to implementation of the real estate

project (project transfer approval).

b. Amendment of existing registration

i. For the transfer of shares or capital

contribution to foreign investors, the

amendment of incorporation licenses

(Enterprise Registration Certificate,

Investment Registration Certificate)

and/or notification on the change of

shareholding ownership to reflect the

change of shareholders should be

obtained from/submitted to the competent

licensing authority.

ii. For transfer of real estate assets, the

parties must register for amend land use

rights certificate to reflect the change of

property ownership as the result of the

project transfer.

iii. For the transfer of other assets which are

required to register ownership, the

amendment of ownership registration

license/certificate to reflect the change of

owner is required.







6. Share/Capital Contribution transfer

All rights and liabilities of the selling party over the

sold shares/capital contribution shall be

automatically transferred to the purchasing party

accordingly. This means that the purchasing party

shall take over all interests and bear all debts arising

from the transacting shares/capital contribution.

Asset transfer

The buyer/investor shall have all rights and interests

(as asset’s owner) over the sold assets transferred

automatically from the seller to the buyer.

Merger

All rights and liabilities of the Target Company shall

be automatically transferred to the Surviving

Company, including the rights and liabilities over the

capital, the assets, the employees, the business, etc.

Consolidation

All rights and liabilities of the consolidating

companies shall be automatically transferred to the

consolidated company including the rights and

liabilities over the capital, the assets, the employees,

the business, etc.

Vietnam


Division/Separation

The new companies after division must be jointly

liable for unpaid debts, labour contracts and other

property obligations of the company being divided.

The company being separated, and the separate

company must be jointly liable for unpaid debts,

labour contracts and other property obligations of the

company being separated.


and an asset sale?

The applicable taxes in Private M&A deals are


transaction chosen by the parties in practice, the

legal entities of the sellers, and the enterprise form

of the target company, the type and particular of

assets, Generally:

7. For Share/Capital Contribution transfer

A capital gain tax of (i) 20% of the gain (the

difference between the transaction

consideration and the investment cost) or (ii)

0.1% on the sale proceeds.

For asset transfer

The asset transfer is subject to the income tax,

value added tax, and registration fee.




Private M&A Deal?

No employees’ consultation or approval is required

in a Private M&A Deal. However, in case of merger

or consolidation, the company must inform their

employees about such transaction within fifteen (15)

days after the internal approval of the same.

In a merger or consolidation deal, the merged or

consolidated company shall automatically inherit the

employee contracts. However, the new employer

has the following rights:

1. to amend and/or supplement the labour

contracts; and

2. if the new employer decides not to re-employ all

employees, to assign to some employees’ part-

time jobs and/or to terminate the labour

contracts of some employees under a plan of

employment, which is prepared after

consultation with the representative of the

employees.

In an asset acquisition deal, the buyer shall not

inherit the employee contract. The seller has the

responsibility to implement a plan of employment

after consultation with the representative of the

employees.





Yes. In principle, in a purchase agreement of shares

or assets involving a foreign party, the parties are

entitled to choose a foreign law as governing law of

their transaction.

However, if the purchase transaction involves a real

property, the governing law of the transaction must

be the law of the country where is located the subject

real property.


jurisdiction?

Domestic commercial arbitration awards can be

enforced under the Law on Enforcement of Civil

Judgments. Accordingly, an arbitration award shall

be voluntarily performed by the judgment debtor(s)

within 30 days as from the date when the judgment

debtor has duly received or been informed of the

arbitration award. Otherwise, the judgment

Vietnam


creditor(s) shall be entitled to request the Civil

Judgment Enforcement Management Agencies for a

coercion of enforcement of such arbitration award

upon the procedures set forth by laws.

Foreign arbitral awards can be enforceable in

Vietnam subject to the recognition of the competent

court of Vietnam. Since Vietnam is a party to the

1958 New York Convention on the Recognition and

Enforcement of Foreign Arbitral Awards (“New York

Convention”), the recognition and enforcement of

such awards in Vietnam must comply with the New

York Convention and conform concurrently to the

conditions and procedures stated in Vietnam Civil

Proceedings Code. However, in cases of foreign

arbitration awards issued by arbitration of countries

which are not members of the New York Convention,

the recognition and enforcement of such arbitration

awards shall be conducted under bilateral

agreements on judicial cooperation between

Vietnam and such countries (if any) or under the

reciprocity principle.

As long as a foreign arbitration award is recognised

by a Vietnamese court, it shall be enforced in the

same manner as a domestic award.

Merger Control Issues


Asia Market Entry – Merger Control Issues

Country

Merger Provisions in Generic Competition Law

Dedicated Enforcement Agency(ies)

Transactions covered

Notification (Voluntary / Compulsory)

Notification Thresholds

Stand-still Period

Review Timelines

Availability To Offer Commitments

Directions / Sanctions / Penalties

Brunei Yes Not yet

established

Mergers,

amalgamations,

acquisitions of

shares/assets,

or joint ventures

Voluntary

(pre or post-

merger)

NA No NA Yes Issue directions

Impose financial penalties

Cambodia NA x x x x x x x x

China Yes Yes

(Anti-monopoly

Bureau of the

Ministry of

Commerce)

Mergers,

amalgamations,

acquisitions of

shares/assets,

or joint ventures

Compulsory as

long as relevant

thresholds are

met

Depending on

(i) Combined

business

volume

worldwide and

the business

volume of single

companies in

China; or

(ii) Combined

business

volume in China

and the

business

volume of single

companies in

China

30 days 90 days Yes Issue orders or directions such as to stop the merger, to dispose shares or assets, to transfer the business or adopt other necessary measures to restore the market situation before the merger



Country






Stand-still Period

Review Timelines



may impose financial penalties

Indonesia Yes Yes

(Indonesian

Competition

Commission or

Komisi

Pengawas

Persaingan

Usaha

(“KPPU”))

Mergers,

consolidation

and acquisitions

of shares or

assets

Voluntary pre-

merger and

compulsory

post-merger

Combined value of Indonesian assets of the merged entity > IDR 2.5 trillion [IDR 20 trillion for banking and financial institutions]; or

Combined sales value (turnover) in/to Indonesia of the merged entity > IDR 5 trillion

No Voluntary pre-merger

Comprising 2 stages of review process, which are: o Phase I

(30 working days max for preliminary review); and

o Phase II (60 working days for comprehensive assessment).

KPPU review will enter Phase II only if: (i) the business of the relevant parties in the transaction creating an

Yes KPPU is entitled to impose financial penalties for failure to notify, in the amount of IDR 1 billion per day commencing after 30 working days, with a maximum fine of IDR 25 billion.

In case the transaction is considered to result in monopoly practices and/or unfair business competition, KPPU is entitled to impose administrative sanction in the form of: (i) financial penalties



Country






Stand-still Period

Review Timelines



ex-post HHI (Herfindahl-Hirschman Index) higher than 1800 and a delta exceeding 150; and/or (ii) there is a vertical (business) link between the relevant parties holding dominant position in the market.

Compulsory post-merger Unlike voluntary pre-merger, there is only one stage of review process under compulsory post-merger, i.e. 90 working days max.

between IDR 1 billion and IDR 25 billion: and/or (ii) cancelation of the merger or consolidation or acquisition of shares.



Country






Stand-still Period

Review Timelines



Laos Yes

Not yet

established

Merger,

acquisitions of

shares/assets

or joint ventures

Compulsory

(pre-merger for

large

enterprises and

post-merger for

SMEs)

Company Size Yes Up to 30 days,

may be

extended for

additional 30

days

NA Impose financial penalties

Others?

Malaysia No Yes

(MyCC)

x x x x x x x

Myanmar Yes

(Entering into

force 2017)

Not yet

established

Mergers,

amalgamations,

acquisitions of

shares/assets,

joint ventures or

mutual business

co-operations

Not provided Market Share NA NA NA Suspend or terminate business operations

Impose financial penalties and/or imprisonment (up to 2 years)

Philippines Yes Yes

(PCC)

Mergers,

amalgamations

or acquisitions

of shares/assets

Compulsory

(pre-merger)

Value of

transaction

exceeds PHP

2.2 billion, and

assets or

turnover of at

least 1 party in,

or into the

Philippines of

PHP 5.6 billion

Yes Up to 90 days Yes Impose financial penalties for failure to notify

Issue directions / impose financial penalties



Country






Stand-still Period

Review Timelines



Singapore Yes

Yes

(CCS)

Mergers,

amalgamations,

acquisitions of

all or

parts of

shares/assets,

joint ventures

Voluntary Market share of merged entity 40% or more; or

Market share of merged entity 20% to 40% and CR3 is 70% or more

No Phase 1 – Up to

30 working days

Phase 2 – Up to

additional 120

working days

Yes Issue directions to remedy competition concerns, including divestment


Thailand Yes Yes

(TCC)

Mergers,

amalgamations

or acquisitions

of all or

parts of

shares/assets

Not stated To be provided

in guidelines

NA 90 days with

extension of not

more than 15

days

Yes Issue directions


Vietnam Yes Yes

National

Competition

Commission -

NCC)

Mergers,

consolidations,

acquisitions/

subscription,

joint ventures

Compulsory

(pre-merger)

New law on

competition

(Law on

Competition No.

23/2018/QH14)

is effective from

1 July 2019.

There has been

no further

guidance on

implementation

of this new

regulation

relating to

notification

threshold for

Yes Phase 1 – Up to

30 days

Phase 2 – Up to

90 additional

days with

extension of up

to 60 additional

days

Yes Impose

financial

penalties for

failure to

notify

Issue

directions to

remedy

competition

concerns,

including

divestment



Country






Stand-still Period

Review Timelines



M&A as at

October 2019.

As at October

2019, it is

regulated that

notification

thresholds

shall be

determined by

the

Government

from time to

time based on

the total

assets or total

turnover in

Vietnam

market of the

companies

involved in the

merger, the

combined

market shares

of those

companies in

the relevant

market or the

value of the

M&A

transaction.

Rajah & Tann Asia


Key Contacts

Cambodia China

R&T Sok & Heng Law Office Rajah & Tann Singapore LLP Shanghai Representative Office

Heng Chhay

Managing Partner

T +855 23 963 112 / 113

E [email protected]

Chia Lee Fong

Chief Representative

T +65 6232 0734 / +86 21 6120

8818

E [email protected]

Hout Sotheary

Partner

T +855 23 963 112 / 113

E [email protected]

Linda Qiao

Senior International Counsel

T +86 21 6120 8818 / +86 135

6465 5259

E [email protected]

Indonesia Lao PDR

Assegaf Hamzah & Partners

Rajah & Tann (Laos) Co Ltd

Tunggul Purusa Utomo

Partner

T +62 21 2555 7800

E [email protected]

Lee Hock Chye

Managing Partner

T +60 3 2273 1919

E hock.chye.lee

@christopherleeong.com

Eko Ahmad Ismail Basyuni

Partner

T +62 21 2555 7800

E [email protected]

Khanti Syackhaphom

Legal Advisor

T +856 20 2244 0890

E khanti.syackhaphom

@rajahtann.com

Get in Touch


Malaysia Myanmar

Christopher & Lee Ong

Rajah & Tann NK Legal

Kuok Yew Chen

Partner

T +60 3 2273 1919 / +60 1 7211

1320

E yew.chen.kuok


Dr Min Thein

Managing Partner

T +959 7304 0763

E [email protected]

Yau Yee Ming

Partner

T +601 7362 3459

E yee.ming.yau


Philippines Singapore

Gatmaytan Yap Patacsil Gutierrez & Protacio

(C&G Law)

Rajah & Tann Singapore LLP

Jaime Renato B. Gatmaytan

Partner

T +632 894 0377 to 79; +632 894

4931 to 32; +632 552 1977

E [email protected]

Lim Wee Hann

Partner

T +65 6232 0606

E [email protected]

Albert Vincent Y. Yu Chang

Partner

T +632 894 0377 to 79

E albert.yuchang

@cagatlaw.com

Terence Quek

Partner

T +65 6232 0277

E [email protected]

Get in Touch


Thailand Vietnam

R&T Asia (Thailand) Limited

Rajah & Tann LCT Lawyers

Nattarat Boonyatap

Partner

T +66 2656 1991

E nattarat.boonyatap

@rajahtann.com

Vu Thi Que

Partner

T +84 28 3821 2382 / +84 28 3821

2673

E [email protected]

Dussadee Rattanopas

Partner

T +66 2656 1991

E dussadee.rattanopas

@rajahtann.com

Tran Thi Phuong Thao

Partner

T +84 28 3821 2382 /

+84 28 3821 2673

E [email protected]

Rajah & Tann Asia


Our Regional Presence

ASEAN Economic Community Portal

The launch of the ASEAN Economic Community

(“AEC”) in December 2015, businesses looking to

tap the opportunities presented by the integrated

markets of the AEC can now get help a click away.

Rajah & Tann Asia, United Overseas Bank and RSM

Chio Lim Stone Forest, have teamed up to launch

“Business in ASEAN”, a portal that provides

companies with a single platform that helps

businesses navigate the complexities of setting up

operations in ASEAN.

By tapping into the professional knowledge and

resources of the three organisations through this

portal, small- and medium-sized enterprises across

the 10-member economic grouping can equip

themselves with the tools and know-how to navigate

ASEAN’s business landscape. Of particular interest

to businesses is the "Ask a Question" feature of the

portal which enables companies to pose questions

to the three organisations which have an extensive

network in the region. The portal can be accessed at

http://www.businessinasean.com.

Rajah & Tann Asia


Regional Contacts


T +65 6535 3600

sg.rajahtannasia.com

Christopher & Lee Ong

T +60 3 2273 1919

F +60 3 2273 8310

www.christopherleeong.com

R&T Sok & Heng Law Office

T +855 23 963 112 / 113

F +855 23 963 116

kh.rajahtannasia.com

Rajah & Tann NK Legal Myanmar Company Limited

T +959 7304 0763 / +951 9345 343 / +951 9345 346

F +951 9345 348

mm.rajahtannasia.com


Shanghai Representative Office

T +86 21 6120 8818

F +86 21 6120 8820

cn.rajahtannasia.com

Gatmaytan Yap Patacsil Gutierrez & Protacio (C&G Law)

T +632 8894 0377 to 79 / +632 8894 4931 to 32

F +632 8552 1977 to 78

www.cagatlaw.com

Assegaf Hamzah & Partners

Jakarta Office

T +62 21 2555 7800

F +62 21 2555 7899

Surabaya Office

T +62 31 5116 4550

F +62 31 5116 4560

www.ahp.id

R&T Asia (Thailand) Limited

T +66 2 656 1991

F +66 2 656 0833

th.rajahtannasia.com

Rajah & Tann LCT Lawyers

Ho Chi Minh City Office

T +84 28 3821 2382

F +84 28 3520 8206

Hanoi Office

T +84 24 3267 6127

F +84 24 3267 6128

www.rajahtannlct.com

Rajah & Tann (Laos) Co., Ltd.

T +856 21 454 239

F +856 21 285 261

la.rajahtannasia.com

Member firms are constituted and regulated in accordance with local legal requirements and where regulations require, are independently

owned and managed. Services are provided independently by each Member firm pursuant to the applicable terms of engagement between the Member firm and the client.

Disclaimer


Disclaimer

The contents of this guide are owned by Rajah &

Tann Singapore LLP and subject to copyright

protection under the laws of Singapore and, through

international treaties, other countries. No part of this

guide may be reproduced, licensed, sold, published,

transmitted, modified, adapted, publicly displayed,

broadcast (including storage in any medium by

electronic means whether or not transiently for any

purpose save as permitted herein) without the prior

written permission of Rajah & Tann Singapore LLP.

Please note also that whilst the information in this

guide is correct to the best of our knowledge and

belief at the time of writing, it is only intended to

provide a general guide to the subject matter and

should not be treated as a substitute for specific

professional advice for any particular course of

action as such information may not suit your specific

business and operational requirements. It is to your

advantage to seek legal advice for your specific

situation.

For more information on issues arising in specific

countries, please contact the persons above. For

issues arising in a country not listed above, please

feel free to contact the Singapore team in the first

instance or e-mail Knowledge & Risk Management

at [email protected].

Documents

GUIDE TO PRIVATE MERGERS & ACQUISITIONS IN ASIA